Agencies aren't fully reimbursing IRS

The Internal Revenue Service is not being reimbursed for work it provides to other government agencies, according to a report from the Treasury Inspector General for Tax Administration.

In the report, TIGTA said it has not been repaid nearly $28 million of the $90 million in work the IRS was commissioned to undertake with other government entities. 

“When the IRS is reimbursed less than the cost of performing reimbursable work, it must fund this work using its own operating budget,” the report stated.

In fiscal 2011, the IRS had undertaken 89 separate work agreements with federal agencies and state and foreign governments. The report found that the IRS was not using a consistent method to calculate the overhead costs of the reimbursable services. This meant the total amount to be repaid to the IRS may have been understated.

“We determined that the IRS is not always charging other entities for the full costs of the work performed on reimbursable agreements,” the auditors added.

According to the TIGTA report, the agency’s chief financial officer is responsible for “budgetary oversight and accountability for the IRS reimbursable program.” In a statement responding to the report, Pamela LaRue, the agency’s CFO, said the IRS would begin assessing all agreements starting fiscal 2013.

“It is unlikely our customers would agree to renegotiate agreements at a higher cost after the agreements have been signed,” LaRue wrote.